Petco tries to ‘Amazon-proof’ its business with a new store

Petco is trying to Amazon-proof its business. Time will tell if the strategy really works.

The privately held pet-goods retailer has just opened a new service-focused store that aims to give shoppers something they can’t buy online. A pilot location opened this past Friday in San Marcos, California. Called PetCoach, it offers grooming, training, veterinary care, dog walking and more to pet parents, in addition to a limited assortment of products.

The company said it plans to open more of these spaces in the future, using the San Marcos location as a testing ground. Part of this experiment also includes a new membership option.

“If you aren’t testing and trialing new things you are going to struggle to be really relevant five years from now,” Brock Weatherup, executive vice president of strategic innovation and digital experience at Petco, told CNBC. Keeping the growing audience of “millennial pet owners” in mind, Petco wanted to “be able to figure out what the world of retail looks like five years from now,” he said.

The launch of the new PetCoach store comes as the pet-goods industry overall has been under increasing pressure, with margins being squeezed thinner.

Amazon has its own pet food brand called Wag. Privately held rival PetSmart acquired Chewy.com, a pet food and product site, in 2017 in a deal sources say was valued at roughly $3 billion. The company though, has been slow to integrate, which is leaving it grappling with the debt-load it brought.

Then, pet brand Blue Buffalo, now owned by General Mills, has been moving out of the specialty space and into mass retailers like Walmart and Target, forcing companies like Petco and PetSmart to either bring in other specialty brands or invest in their own to compete. Earlier this year, Petco announced a partnership with JustFoodForDogs to bring fresh items into stores.

“I’ve studied Amazon and I’m impressed by them and admire them,” Weatherup said. “But we feel really good about our chances to Amazon-proof our business. … We believe there’s a huge part of what we do that Amazon cannot [do].”